Using liposome-entrapped SV40 DNA as a model system to infect monkey kidney cells the carrier potential of liposomes in gene transfer has been tested. The frequency of plaque formation corresponds to the frequency of successful DNA transfer and this was quantitated. The results of these experiments have shown that liposome-entrapped SV40 DNA becomes infectious when incubated with monkey kidney cells, that the frequency of plaque formation can be modulated by lipid composition of the liposomes and various treatments of the cells and that the addition of carrier DNA inhibits infectivity. Preliminary results of some experiments indicate that liposome-entrapped SV40 DNA can be used to transform mouse cells, an event which requires integration of viral DNA into these cells.